QUIZ plc & Macfarlane Group plc: 2 high-growth stocks you could regret not buying

Fast fashion retailer QUIZ(LSE: QUIZ), which focuses on occasionwear and dressy casualwear, today released its maiden half-year results as a listed company. It reported "strong growth" across all channels and said it "enters the important Christmas trading period with good momentum."

Quiz questions

For the six months ended 30 September, it posted a 35% increase in both revenue and underlying earnings per share (EPS). Statutory EPS was down 3%, due almost entirely to the costs of its flotation (at 161p a share) on AIM in July.

I wrote an in-depth review of the company shortly after its listing, when the share price had risen to 190p. I thought it looked a decent business with good prospects but I felt the valuation of this omnichannel company had been bumped up too high by management talking up its digital offering. I suggested: "You'll be able to pick the shares up below 190p in the coming months."

So, where are we four months on? What do today's results tell us? And what of the current valuation?

I'm impressed

The 35% increase in first-half revenue resulted from a 15.2% advance in UK stores and concessions, a 26.1% rise in International and a whopping 204.6% uplift in Online, which now accounts for 24.6% of group revenue compared with 10.8% a year ago.

The online growth came through QUIZ's own website, a number of third-party websites, as well as the commencement of sales on the Next and Zalando websites. I'm impressed and believe QUIZ merits a somewhat higher valuation than in my original assessment.

The shares closed yesterday at 157.5p but are currently up 5.7% at 166.5p. The market cap is £206.8m and trailing 12-month sales are £104.4m, giving a price-to-sales (P/S) ratio of two, compared with 2.6 in July. This looks good value to me and while there are always higher risks with a small-cap with a short history as a listed company, I'm now inclined to rate the stock a 'buy'.

Packing a punch

Macfarlane is a small-cap company I previously rated a 'buy' at 62p when I wrote about it ahead of its annual results in February. This packaging specialist, which is growing fast -- organically and by acquisitions -- in a fragmented market, is currently trading at 77p, giving it a market cap of £121m.

The group has three divisions. In Packaging, it's the leading UK distributor of a comprehensive range of protective packaging products. In Labels, it designs and prints high quality self-adhesive and resealable labels, principally for fast-moving-consumer-goods customers in the UK, Europe and the US. In Packaging Design and Manufacture, it designs and produces protective packaging for high value, fragile products.

In an update on this year's trading last week, the board said it "remains confident that our full-year expectations will be met." The house broker forecasts EPS of 6.09p, giving an undemanding price-to-earnings ratio of 12.6. And with EPS of 6.09p representing over 30% growth on last year's 4.67p, the price-to-earnings growth ratio is a cheap 0.4. So, despite the rise in the shares since February, I continue to see good value here and rate the stock a 'buy'.

Could there be an even better growth prospect?

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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